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Court Rejects Employee’s Challenge to Legality of Company Policies

In May 2016, the Jimei District Court in Xiamen dismissed an employee’s challenge to the legality of the company’s policy adoption procedure, and as a result rejected the claims for unpaid overtime payment and commissions.

In June 2012, the company convened an all-employee meeting to adopt its policies and the participants signed the meeting minutes. The company then lost the original meeting minutes, so it arranged for the employees to re-sign the newly-prepared minutes. The employee who brought the claims also separately signed an acknowledgment of receipt of the policies on an annual basis from 2012 to 2014. In addition, his employment contract provided that he should abide by the company’s rules and policies, and that such rules should be attached to the employment contract as annexes (according to the court, the rules were in fact attached to the contract).

The employee resigned and signed a termination contract under which he agreed to waive all claims against the company, but then brought payment claims before the labor tribunal and court. He argued that he was not aware of the company polices (e.g., the overtime application procedure and the commission policy), and therefore, he should be entitled to additional overtime payment and commissions. The company, on the other hand, argued that the employee would not be entitled to any overtime pay or commissions, as its policy made it clear that employees should obtain an approval to work overtime, and this employee did not submit any overtime application. In addition, the policy also stated that employees who left the company are not eligible to receive any outstanding commissions.

The court ruled that the company policies were properly adopted and should be binding on the employee. The employee had signed an acknowledgment of receipt of the policies and re-signed the meeting minutes to confirm the content of the policies. In addition, there was evidence to demonstrate that the employee had actually followed the overtime payment policy and the commission policy during his employment, and therefore he was both aware of and bound by the company policies. Furthermore, the employee had waived all claims against the company in the termination document. On this basis the court dismissed the employee’s claims.

Key Take-Away Points:

Companies should follow the statutory employee consultation procedure to adopt their rules and policies, and should ensure that the whole process has been fully documented. In addition, to avoid future disputes, the company should carefully retain all documentation related to the adoption procedure. It is also recommended that employees confirm receipt of the company policies in the employment contract, as such provisions can be used as direct evidence to prove the employee’s acknowledgement of the policies.

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